26 August 2025
Cargo Insurance Market Update 2025
The global cargo market over the past 12 months has entered a new phase. Underwriters will tell you that it is ‘transitioning’; however, brokers will tell you ‘softening quickly’. As in previous years, this still doesn’t mean a return to the bottom of the soft market in 2017 overnight, but as night follows day, the dynamics of a market cycle are being played out over time. The global cargo market has been profitable over the past few years, and this has led to a wave of new entrants to the market. This increased capacity has meant a reduction in pricing overall. However, the reason we aren’t at the bottom of the market is that conditions have largely remained unchanged. Deductibles, wordings and conditions have not been amended significantly. Therefore, profitability remains within the class.
The market will continue this downward trend for the foreseeable future. Markets are looking to increase lines to maintain income levels or try to increase them just to stand still. This leads to increased signings and, as such, increased competition. This competition is really starting to heat up and will continue into the fourth quarter of 2025 and onwards to 2026.
We feel that whilst the number of markets remains just below 2017 (the bottom of the last cycle), the total USD capacity in the market now outstrips 2017. This global capacity remains at c.USD1,500,000,000.
In our 2022 update, we stated: “This means that it is achievable to place a vertical limit of USD700,000,000 + in London at far more favourable pricing than in previous years.”
We’d estimate that we can now achieve c.USD2billion, which shows the speed of change in just three short years.
RISE OF THE MGA
The current cycle is going to be dominated by the rise of the MGA. MGAs will often look to target one particular area of the market, specialism, geography or class of business. There is a place in the market for these offerings. Some entrants are writing across all areas, looking to be nimbler in their offering than a traditional syndicate or company. The change that we are going to see is some MGAs realising that their niche areas need diversifying and therefore offering to write wider interests. These MGAs will have to continue to be aggressive in their pricing as they need to build volume more than anything to achieve sufficient return for shareholders and seed investors. This leaves clients with the inevitable decision of chasing the premium savings versus the long-term, slightly more stable basis of the Lloyd’s, company or regional markets. This does not mean that MGAs do not have a place within the market and can offer solutions that the remainder of the market often is unable to.
GLOBAL SUPPLY CHAINS AND RISK TRANSFER
Supply Chains continue to be varied, vast and complicated. These trade flows are constantly changing, and various political decisions such as tariffs, trade deals, Brexit, etc continue to dominate this constantly changing world. Marine Cargo insurance continues to be a very flexible and dynamic cover for such supply chains. However, it doesn’t cover all eventualities for potential balance sheet loss. Now is the time to be exploring potential worries within supply chains and how risk transfer can be made more effective, now that there is more tolerance for risk within the insurance world. Assureds have very different exposure within their own supply chains and therefore these conversations are bespoke, and where specialty knowledge of both businesses and the insurance world is key.
CURRENT THEMES
The established themes of the past few years continue to focus the market.
- War and Geopolitical Events – Once again, potential increased tensions in the Middle East have led to a number of markets looking to charge war APs for the Persian Gulf. However, as quickly as this rose as a possibility, it dissipated, partly showing market dynamics in a microcosm, and partly due to the fragile ceasefire. However, we are seeing ratings reducing in the Red Sea as exposure reduces and capacity increases.
- Vessel Fires – In the space of a few weeks in May and June 2025, we have seen losses from the Morning Midas (carrying 3,159 vehicles), Wan Hai 503, MSC Elsa 3, InterAsia Tenacity, and Wan Hai 613. Whilst the market accepts that these losses happen, it leads to an element of chance and ensures line size discipline remains. It shows that mis-declared cargoes and lithium-ion battery products remain a high exposure. Any company with the best risk management in the world can not control that their goods are in a container next to a mis-declared dangerous cargo.
- New Technology – This continues to be the question within the market as to how technology will shape the risks they underwrite – for example, improved data, information and tracking. Changes in understanding exposure management, supply chain exposure, and non-insured coverages, such as demurrage.
CLIENT CONSIDERATIONS
We will always advocate for creating the closest possible relationship with carriers over the long term, find placements that work for yourselves as Assureds, and genuinely provide value over the long term.
Top Tips for renewal
- Check the layering structure of the programme from the outset of renewal
- Continue to provide Underwriters with comprehensive renewal information
- For large risks, meet up with your underwriting panel for face-to-face meetings where possible
- Whilst there is a lot of new capacity available, it is important for insureds and local brokers to consider the insurers that remained on risk and partnered with them during the hard market, when insurers’ capacity was limited.
- At Gallagher Specialty, we continue to encourage building long-term relationships between carriers and Insureds.
Let's talk
The Walbrook Building 25 Walbrook London, EC4N 8AW
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.